Posted by : Matthew Wild | On : February 26, 2009

Yesterday, the Supreme Court in Pacific Bell Telephone Co. v. Linkline Communications, Inc., No. 07-512 (Feb. 25, 2009) (LinkLine decision  here) unanimously rejected a price squeeze claim alleged under Section 2 of the Sherman Act.  Pac Bell is a DSL transport service and retail service provided.  Linkline, an independent DSL service provider, competed with Pac Bell on the retail level but needed to purchase Pac Bell’s transport service to provide DSL to its retail customers.  Linkline alleged that Pac Bell engaged in a price squeeze by charging Linkline too high a wholesale price for DSL transport service and charging its retail customers too low a price on DSL service.  The Court rejected this claim because (1) Pac Bell had no obligation to deal with Linkline and thus the prices it charged to Linkline are of no consequence and (2) Pac Bell was not alleged to have engaged in predatory pricing at the retail level — i.e., charging prices below  cost with a dangerous probability that it can raise its prices later and recoup its losses.  Chief Justice Roberts aptly summarized the Court’s rationale, “Trinko holds that a defendant with no antitrust duty to deal with its rivals has no duty to deal under terms and conditions preferred by those rivals.  Brooke Group hold that low prices are only actionable under the Sherman Act when prices are below cost and there is a dangerous probability that the predator will be able to recoup the profits it loses from low prices.  In this case, plaintiffs have not stated a duty-to-deal claim under Trinko or a predatory pricing claim under Brooke Group.  They nontheless tried to join a wholesale claim that cannot succeed with a retail claim that cannot succeed and alchemize them into a new form of antitrust  liability never before recognized by this Court.  We decline the invitation to recognize such claims.  Two wrong claims do not make one that is right.”

The background to this case is unusual.  The June 3, 2008 Post reported a rare disagreement between the DOJ’s Antitrust Division and FTC over whether to grant certiorari.  The Antitrust Division filed a brief supporting certiorari (which the FTC declined to join) and the FTC issued a statement explaining why certiorari should be denied.  It also seems as if the Supreme Court reached out to decide this case as Linkline argued that it abandoned its price squeeze claim and wanted to pursue a predatory pricing claim under Brooke Group.  The Court rejected the mootness argument and believed that the issues were adequately explored to make a reasoned decision based on the amici’s submissions.



Posted by : Matthew Wild | On : September 11, 2008

The attorneys general of Virginia, Alabama, Colorado, Florida, Kansas, Nebraska, Oklahoma, Utah and Washington filed an amicus curiae brief in favor of petitioner in Pacific Bell Telephone Co. v. Linkline, No. 07-512, which is pending before the Supreme Court.  This case raises the issue of whether a price squeeze claim can be maintained against a firm that does not have a duty to deal with the plaintiff.  As discussed in the Post of June 24, 2008, this case created a conflict between the Antitrust Division and FTC.  The Antitrust Division filed an amicus curiae brief supporting certiorai and urging reversal while the FTC issued a statement asserting that this case was not appropriate for certiorari and in any event, was correctly decided.  The brief (attached States Amicus Curiae Brief) filed by these nine state attorneys general supports the Antitrust Division’s position.



Posted by : Matthew Wild | On : June 24, 2008

On June 23, 2008, the Supreme Court granted certiorari in Pacific Bell Telephone Co. v. Linkline Communications, No. 07-512, 2008 WL 2484729 (U.S. June 23, 2008). In a highly unusual public disagreement, the Antitrust Division had filed an amicus curiae supporting certiorari while the FTC had issued a statement opposing certiorari. More on this disagreement is set forth in the June 3, 2008 post.



Posted by : Matthew Wild | On : June 3, 2008

On May 23, 2008, the FTC issued a statement explaining its reasons for its decision not to join the DOJ’s brief that seeks Supreme Court review of LinkLine Comm’n v. Pacific Bell Telephone Co., 503 F.3d 876 (9th Cir. 2007). The FTC “disagree[d] with DOJ’s analysis, and … [believed that] this case does not appear to be worthy of review at this time.” FTC Statement at 1. The FTC recognized that “[t]he Ninth Circuit is unquestionably correct: … claims of a predatory price squeeze in a partially regulated industry remain viable.” Id., at 3. The FTC also believed that because the Ninth Circuit’s decision resolved a motion to dismiss, it was premature for Supreme Court review. The lower court had yet to decide the appropriate measure of cost for the input. Therefore, the Supreme Court could not opine on this issue and any decision would be of limited value. The FTC Statement is attached. FTC Statement (linkLine)